Polkadot has become the latest blockchain network to support the stablecoin USDC, with the asset’s issuer Circle now launching USD Coin on the interoperable platform.
However, Circle has warned users about a major caveat when using Polkadot USDC across parachains.
Polkadot USDC is natively issued on the network’s Asset Hub parachain. This common chain allows assets to be managed and transferred between different parachains via Polkadot’s cross-chain messaging (XCM) system.
Herein lies the crux of the issue highlighted by Circle. The company explained that its Circle Account and API services only recognize the version of USDC issued on Asset Hub.
“Please do not attempt to deposit XCM-transferred USDC from a parachain other than Polkadot Asset Hub to your Circle Account, as it may not be recoverable and could result in a loss of funds,” the firm cautioned.
This means that users must take care to re-transfer any USDC sent from Asset Hub back to the parachain before depositing to an account with Circle. Failure to do so risks the permanent loss of funds.
The warning highlights difficulties in maintaining the fungibility of assets across different chains connected via cross-chain bridges. While the TokenID may be the same, differences in the technical implementation can make coins non-interchangeable.
USDC has experienced rapid growth over the past year as Circle continues to onboard new blockchains. The asset now has support on 14 different networks including Ethereum, Solana, Tron, and Stellar.
The expanded functionality aims to position USDC as the stablecoin of choice for decentralized finance (DeFi) and Web3 applications. However, Circle’s warning shows that making a true “internet of blockchains” vision a reality still faces hurdles when it comes to interoperability.
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